Modern slavery reporting is forcing manufacturers to rethink labour practices at home

Modern slavery has long been viewed as a supply chain issue, typically associated with offshore sourcing and complex global networks. For Australian manufacturers, that perception is rapidly shifting. Regulatory scrutiny, investor expectations and mandatory disclosure requirements are bringing the issue much closer to home, forcing organisations here to examine not only who they buy from, but how they manage their own workforce.

At the centre of this shift is the Modern Slavery Act 2018, which only requires entities with annual consolidated revenue above $100 million to report on modern slavery risks across both operations and supply chains.

Australia's first Anti-Slavery Commissioner, Chris Evans, has said that Australia is at risk of becoming a dumping ground for goods linked to forced labour. Comparing Australia's Modern Slavery Act to other jurisdictions, he said there were blind spots in Australia's efforts, which leave us vulnerable to becoming a global laggard.

Early reporting cycles focused heavily on supplier due diligence, but expectations are evolving. Increasingly, attention is turning to domestic labour practices, particularly in sectors like manufacturing, where workforce models are complex and highly variable.

From supply chain oversight to workforce accountability

Initial compliance efforts centred on mapping suppliers, inserting contractual safeguards and conducting offshore risk assessments. However, as reporting matures, it is becoming clear that many of the same risk factors exist within Australian operations.

Labour hire arrangements, subcontracting, casual workforces and multi-site operations can create gaps in visibility. These are not deliberate failings, but they can obscure how work is performed, tracked and remunerated. Under modern slavery reporting frameworks, that lack of transparency is now a governance concern.

Research from the Walk Free Foundation reinforces the scale of the challenge. The Global Slavery Index estimates more than 50 million people are living in conditions of modern slavery worldwide, including in developed economies like China, the United Arab Emirates and Turkey. The report highlights that risk is not confined to distant supply chains but can arise wherever there is cost pressure, workforce vulnerability or weak oversight.

Labour complexity and emerging compliance risk

Manufacturing environments often rely on a mix of permanent employees, contractors and labour hire workers to maintain flexibility. While operationally effective, this model introduces complexity in tracking hours, pay rates, entitlements and working conditions. This is where compliance risk begins to intersect with modern slavery obligations.

Underpayment, excessive overtime, inconsistent award interpretation, or poor record-keeping may not meet the threshold for modern slavery. However, they are recognised indicators of potential labour exploitation. In a reporting environment that prioritises transparency, these issues are increasingly under scrutiny.

The International Labour Organisation has consistently highlighted that forced labour exists on a spectrum. This ILO report shows that poor labour practices can create conditions that increase worker vulnerability, particularly where oversight is limited.

For manufacturers, compliance is no longer just about avoiding breaches. It is about demonstrating that workforce practices actively mitigate the risk of exploitation.

Why legacy workforce management systems are no longer fit for purpose

A major barrier to achieving this level of oversight is the continued reliance on fragmented workforce management processes.

Manual timesheets, spreadsheets and disconnected payroll processes make it difficult to maintain a single source of truth. This creates several challenges:

• Limited visibility into actual hours worked across different employment types.
• Inconsistent application of pay rates and award conditions.
• Delays in identifying irregular patterns, such as excessive overtime.
• Difficulty in auditing labour practices across sites and contractors.

These issues are no longer just operational inefficiencies. In the context of modern slavery reporting, they represent material governance risks.

In this report, the Australian Government's Attorney-General's Department has emphasised the need for organisations to demonstrate effective due diligence and continuous improvement in addressing modern slavery risks. This requires not only policies but also evidence of how risks are identified, monitored and mitigated. However, without accurate, real-time workforce data, this level of assurance is difficult to achieve.

Technology and data as compliance enablers

To meet rising expectations, manufacturers are increasingly turning to integrated workforce management solutions. By bringing together time and attendance, rostering, award interpretation and fully integrating this with their payroll solution, organisations can create a consistent and auditable record of workforce activity. This enables:

• Real-time visibility into working hours and conditions.
• Automated application of awards and pay rules.
• Early identification of anomalies or potential compliance breaches.
• Improved auditability for reporting and governance.

This shift aligns with broader ESG (Environmental, Social, and Governance) expectations. Labour practices are now a central component of the "social" pillar, and modern slavery reporting is a key mechanism for demonstrating accountability.

The Organisation for Economic Co-operation and Development (OECD) stresses that effective due diligence requires organisations to embed responsible business conduct into systems and processes, supported by data and continuous monitoring.

From compliance exercise to operational capability

Modern slavery reporting has moved beyond disclosure. It is now a test of how well manufacturers understand and control their own workforce.

Organisations that treat it as a reporting task risk exposing deeper operational gaps. Those investing in real-time workforce visibility, stronger governance and integrated systems are shifting from reactive compliance to proactive risk management.

This matters more as labour pressures intensify. Skills shortages, ageing workforces and cost constraints are driving greater reliance on flexible labour. Without clear oversight, that flexibility can quickly translate into compliance and reputational exposure.

Modern slavery reporting is forcing a reset. It is pushing manufacturers to rethink how work is structured, tracked and supported at every level.